Productivity Spillovers from Competitive Reallocation: Evidence from Canadian Manufacturing Plants
AbstractThis paper uses plant-level data on productivity growth and changes in market share over different periods during the 1970s, 1980s, and 1990s to investigate whether plants with declining market shares obtain productivity spillovers from more successful producers and whether the impact of spillovers is affected by the distance between plants. We are primarily interested in the extent to which productivity externalities moderate the centrifugal forces that separate growing plants from declining rivals because of the productivity advantages enjoyed by the former. The paper focuses on the productivity performance of plants with declining market shares as potential receivers of productivity spillovers. Two possible sources for these spillovers are examined rival plants operating at the technological frontier and rivals that are actively gaining market share. The analysis advances a model of the externality process in which the productivity of declining plants is influenced by (1) the economic distance of the declining plant from its technological frontier at the beginning of any period, (2) contemporaneous productivity gains in rival plants that are actively wresting market share away from decliners, and (3) the distance between rival plants. We evaluate the existence and magnitude of these sources of spillovers frontier plants and market-share gainers because of what they reveal about the types of productive information that struggling plants may be able to assimilate from rivals. Spillovers from the plants at the existing frontier are likely to reflect the established best practices of industry leaders; spillovers coming from market-share gainers involve new sources of productive knowledge that emerge as the frontier is actively being re-established. Our model also incorporates geographic information on the proximity of declining plants to both frontier plants and market-share gainers to test whether productivity spillovers are spatially circumscribed. The resu
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Statistics Canada, Economic Analysis Division in its series The Canadian Productivity Review with number 2009024e.
Date of creation: 19 May 2009
Date of revision:
Manufacturing; Economic accounts; Productivity accounts;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-23 (All new papers)
- NEP-EFF-2009-05-23 (Efficiency & Productivity)
- NEP-GEO-2009-05-23 (Economic Geography)
- NEP-URE-2009-05-23 (Urban & Real Estate Economics)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Brown).
If references are entirely missing, you can add them using this form.